S&P futures experienced a modest decline early Monday, influenced by downturns in the technology sector after a challenging week, as markets continue to face pressure from high Treasury yields. Futures for the Dow Jones Industrial Average were down by 11 points. S&P 500 and Nasdaq-100 futures experienced declines of 0.1% and 0.5%, respectively. The State Street Technology Select Sector ETF fell nearly 1% in the premarket. Coherent and Lumentum experienced declines of 5% and 4.5%, respectively, leading the losses. Sandisk also declined by 4%, while Corning and Seagate each experienced a decrease of 3%. The Dow last week declined by 0.8%, indicating its second consecutive weekly retreat.
The S&P 500 and Nasdaq experienced declines of 1.4% and 2%, respectively, ending their three-week streaks of gains. In Asia, Japan’s Nikkei 225 concluded the trading session down by 0.74%, whereas South Korea’s Kospi experienced a decline of 3.12%. Australia’s benchmark S&P/ASX 200 rose 0.49%. Mainland China’s CSI 300 concluded the trading session with a decline of 1.21%. Stocks have faced pressure due to increasing bond yields worldwide. The 30-year U.S. Treasury bond yield surpassed 5.3% last week, achieving levels not observed in nearly two decades. Rates in Japan, France, and Germany have reached multiyear highs. Investors expressed concerns that the U.S.-Iran conflict might persist, sustaining elevated oil prices and exacerbating inflationary pressures.
Treasury Secretary Scott Bessent announced measures aimed at stabilising the long-end of the U.S. yield curve; however, that reprieve proved to be short-lived. “I argue that the Treasury’s surprise decision to upsize tactical long-end buybacks is effectively a Treasury-led ‘Operation Twist’ designed to counter shifts in shorter term market conditions, rather than a form of QE,” wrote David Zervos. “While buybacks do not create reserves and therefore lack QE’s direct money-printing channel, I believe they do leave room for fiscal expansion and deliver some QE-like reflationary effects.” Investors this week will receive fresh inflation data with the release of the July personal consumption expenditures price index on Wednesday.
Additionally, the Federal Reserve is set to convene its annual symposium in Jackson Hole, Wyoming, where Chairman Kevin Warsh is anticipated to present a speech. Artificial intelligence will be a focal point, as Nvidia and Marvell Technology are scheduled to report their earnings on Wednesday and Thursday, respectively. Those figures will emerge following a report over the weekend, which cited sources indicating that Nvidia has informed clients of impending price increases exceeding 15% for servers equipped with Vera Rubin and Blackwell chips.
